Cryptopia Liquidation: Everything we know about the shutdown so far

15 May, 2019
by Jelmer van der Dussen
Cryptopia Liquidation: Everything we know about the shutdown so far

Cryptopia is closing up shop, shutting down the exchange while many users still have funds on it. What is going on, and what will happen to the funds of traders? Here is everything we know about the Cryptopia liquidation so far.

So why is Cryptopia going out of business?
Cryptopia is shutting down because of the hack that took place mid-January. From 14 to 17 January, $16 million worth of cryptocurrency was stolen from the exchange. Following a police investigation that took months, Cryptopia finally reopened again mid-April, but it appeared to be only for one month.

On Tuesday, Cryptopia's website went offline because of 'maintenance', but as some users already expected, the exchange wasn't going to reopen again. On Wednesday, a statement of Cryptopia said that David Ruscoe and Russell More from Grant Thornton have been appointed as liquidators of Cryptopia and that trading is suspended.

The statement said: 'The highly publicised hack of Cryptopia’s exchange in January 2019 had a severe impact on the company’s trade. Despite the efforts of management to reduce cost and return the business to profitability, it was decided the appointment of liquidators was in the best interests of customers, staff and other stakeholders.'

Will trading on Cryptopia resume?
It's highly likely that if you still have funds on the exchange, you will not be able to trade those on Cryptopia anymore. While the statement says that trading on the exchange is suspended 'while the investigations take place', leaving an opening for trading to resume once those investigations are completed, there is a great chance the outcome will be that Cryptopia won't open the exchange at any stage for traders.

The investigation is 'going to take monts rather than weeks', the liquidators have said.

Will I ever see my Cryptopia funds again?
At this moment a lot is still unclear, and the liquidators haven't communicated yet on what will happen with the user funds. All that they said was that 'we realise Cryptopia's customers will want to have this matter resolved as soon as possible.'

The big question now is: are the funds that were not taken during the hack still in possession of the exchange? Or is this an exit scam? In the case of the latter, it will be near impossible for users to retrieve their funds.

In case the funds are still on the exchange, the easiest way for Cryptopia would be to allow users to withdrawal their assets from the exchange. But then there are still the liquidators and other creditors/large stakeholders that need to be paid first, leaving not much for the traders.

So the question now is: how much is still left, who gets what, and what will remain for the traders.

This situation remains unclear for now, and we'll be sure to update you when there is more information.

What are the New Zealand media saying?
New Zealand media outlet Stuff visited the headquarters in Christchurch after the Cryptopia website went down, and saw that the 'deserted company building' was locked down, with a chain and padlock on the car park gates.

According to people close to the matter, many of the employees got laid off in the last period, and one of the former staf members said that 'Cryptopia was very different to the professional organisations she had worked for', as 'people within the cryptocurrency trading community lived their lives online and had paranoid tendencies, believing they were outside the mainstream financial system.'

Others said the police investigators looking into the $16 million Cryptopia hack had no idea how to handle such a case. The investigation into the hack is still ongoing.

Could it be an exit scam?
Although the community is shouting 'exit scam' following the Cryptopia announcement, it's too early to say that with certainty. One major thing that makes this look like an exit scam is the fact that Cryptopia opened the exchange a month ago after the hack, knowing business was very bad (with so many staff members getting fired), allowing people to deposits funds again, to start trading again, only to close the exchange without warning a month later.

'Don't panic', Cryptopia said on the website when the exchange closed down for 'maintenance' on Tuesday, while they were appointing liquidators...

What is the community saying?
The crypto community is very upset and angry about the Cryptopia shutdown, especially about the way it is handling it. Others are sad about the 'end of an era'.

History of Cryptopia
Cryptopia was an altcoin-focused exchange that was founded in 2014 by Adam Clark and Rob Dawson. The exchange was popular among traders because it listed small cap cryptocurrencies at an early stage, allowing traders to place (risky) investments in assets with a lot of upside. In the cryptocommunity it was known as an exchange where a lot of 'shitcoins' traded.

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